[186] METROPOLITAN BANK AND TRUST COMPANY v.
NWPC RELEVANT PROVISION(S)
AND RTWPB
G.R. No.144322; February 6, 2007; Austria-Martinez, J.
TOPIC: WAGE ORDER > VALIDITY
SUMMARY
RA No. 6727 created NWPC, vested with power to prescribe rules and
guidelines for the determination of appropriate minimum wage and
productivity measures at the regional, provincial, and industry levels;
and authorized the RTWPB to determine and fix the minimum wage
rates applicable in their respective regions, provinces, or industries
therein and issue the corresponding wage orders, subject to the
guidelines issued by the NWPC. Pursuant to its wage fixing authority,
the RTWPB may issue wage orders which set the daily minimum wage
rates, based on the standards or criteria set by Art. 124 of the LC. In
ECOP, the Court declared that there are two ways of fixing the
minimum wage. The floor-wage method and the salary-ceiling method.
The former involves the fixing of a determinate amount to be added t
the prevailing statutory minimum wage rates. On the other hand, the
wage adjustment was to be applied to employees receiving a certain
denominated salary ceiling. In other words, workers already paid more
than the amount stated in the wage order are also to be given a wage
increase. Employers, other than the minimum wage earners, who
received the wage increase mandated by the wage order need not
refund the wage increase received by them since they received the
wage increase in good faith.
DOCTRINE
The function of promulgating rules and regulations may be legitimately
exercised only for the purpose of carrying out the provisions of a law.
The power of administrative agencies is confined to implementing the
law or putting it into effect. x x x
Administrative or executive acts, orders, and regulations shall be valid
only when they are not contrary to the laws or the Constitution.
FACTS
 On October 17, 1995, the Regional Tripartite Wages and
Productivity Board, Region II, Tuguegarao, Cagayan
(RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727),
otherwise known as the Wage Rationalization Act, issued
Wage Order No. R02-03 (Wage Order), as follows:
Section 1. Upon effectivity of this Wage Order, all
employees/workers in the private sector throughout
Region II, regardless of the status of employment are
granted an across-the-board increase of P15.00
daily.
 The Wage Order was published in a newspaper of general
circulation on December 2, 1995 and took effect on January
1, 1996. Its Implementing Rules were approved on February
14, 1996.
 Per Section 13 of the Wage Order, any party aggrieved by the
Wage Order may file an appeal with the National Wages and
Productivity Commission (NWPC) through the RTWPB within
10 calendar days from the publication of the Wage Order.
 Banker’s Council in a letter inquiry to NWPC requested for
ruling to seek exemption from coverage of the wage order
since the members bank are paying more than the regular
wage.
o NWPC replied that the member banks are covered by
the wage order and does not fall with the exemptible
categories.
 In another letter inquiry, Metrobank asked for the
interpretation of the applicability of the wage order.
 NWPC referred it to RTWPB. RTWPB in return clarified that
establishments in Region 2 are covered by the wage order.
 Petitioner filed a petition with the CA and denied the petition.
ISSUE(S)/HELD in their respective regions, provinces, or industries therein
WON the wage order is void thus it has no legal effect and the and issue the corresponding wage orders, subject to the
RTWPB acted in excess of its jurisdiction. – YES, insofar as it guidelines issued by the NWPC.
grants a wage increase to employees earning more than the o Pursuant to its wage fixing authority, the RTWPB
minimum wage rate. may issue wage orders which set the daily
minimum wage rates, based on the standards or
 The Court finds that Section 1, Wage Order No. R02-03 is void
criteria set by Article 124 of the Labor Code.
insofar as it grants a wage increase to employees earning
more than the minimum wage rate; and  The Court declared that there are two ways of fixing the
o pursuant to the separability clause of the Wage Order, minimum wage: the "floor-wage" method and the "salary-
Section 1 is declared valid with respect to employees ceiling" method.
earning the prevailing minimum wage rate. o The "floor-wage" method involves the fixing of
a determinate amount to be added to the
 The powers of NWPC are enumerated in ART. 121. Powers
prevailing statutory minimum wage rates.
and Functions of the Commission. - The Commission shall
o On the other hand, in the "salary-ceiling"
have the following powers and functions:
method, the wage adjustment was to be applied
(d) To review regional wage levels set by the Regional
to employees receiving a certain denominated
Tripartite Wages and Productivity Boards to
salary ceiling.
determine if these are in accordance with prescribed
o In other words, workers already being paid more
guidelines and national development plans;
than the existing minimum wage (up to a certain
(f) To review plans and programs of the Regional
amount stated in the Wage Order) are also to be
Tripartite Wages and Productivity Boards to
given a wage increase.
determine whether these are consistent with national
development plans;  In the present case, the RTWPB did not determine or fix
(g) To exercise technical and administrative the minimum wage rate by the "floor-wage method" or the
supervision over the Regional Tripartite Wages and "salary-ceiling method" in issuing the Wage Order.
Productivity Boards. o The RTWPB did not set a wage level nor a range
to which a wage adjustment or increase shall be
 R.A. No. 6727 declared it a policy of the State to
added.
rationalize the fixing of minimum wages and to promote
o Instead, it granted an across-the-board wage
productivity-improvement and gain-sharing measures to
increase of P15.00 to all employees and workers
ensure a decent standard of living for the workers and
of Region 2. In doing so, the RTWPB exceeded
their families; to guarantee the rights of labor to its just
its authority by extending the coverage of the
share in the fruits of production; to enhance employment
Wage Order to wage earners receiving more than
generation in the countryside through industrial dispersal;
the prevailing minimum wage rate, without a
and to allow business and industry reasonable returns on
denominated salary ceiling. As correctly pointed
investment, expansion and growth.
out by the OSG, the Wage Order granted
 In line with its declared policy, R.A. No. 6727 created the
additional benefits not contemplated by R.A. No.
NWPC, vested with the power to prescribe rules and
6727.
guidelines for the determination of appropriate minimum
 As applied in the case of Blaquera v. CA:
wage and productivity measures at the regional,
Considering, however, that all the parties here acted in
provincial or industry levels; and authorized the RTWPB
good faith, we cannot countenance the refund of subject
to determine and fix the minimum wage rates applicable
 incentive benefits for the year 1992, which amounts the
petitioners have already received. Indeed, no indicia of
bad faith can be detected under the attendant facts and
circumstances. The officials and chiefs of offices
concerned disbursed such incentive benefits in the honest
belief that the amounts given were due to the recipients
and the latter accepted the same with gratitude, confident
that they richly deserve such benefits.
o The Court ruled that Employers, other than the
minimum wage earners, who received the wage
increase mandated by the wage order need not
refund the wage increase received by them since
they received the wage increase in good faith.

RULING
In no uncertain terms must it be stressed that the function of
promulgating rules and regulations may be legitimately exercised only
for the purpose of carrying out the provisions of a law. The power of
administrative agencies is confined to implementing the law or putting
it into effect. Corollary to this guideline is that administrative regulation
cannot extend the law and amend a legislative enactment. It is
axiomatic that the clear letter of the law is controlling and cannot be
amended by a mere administrative rule issued for its implementation.
Indeed, administrative or executive acts, orders, and regulations shall
be valid only when they are not contrary to the laws or the Constitution.

DISPOSITIVE: WHEREFORE, the petition is PARTIALLY

GRANTED.